False pretences of knowledge about complicated economic situations have become all too common in public policy debates. This column argues that policymakers should take into account what they don’t know in their decision making. It describes a tractable approach for acknowledging, characterising, and responding to different forms of uncertainty, by using theories and statistical methods available at any particular moment.

Dealing with uncertainty about the state of the economy is one of the main challenges facing monetary policymakers. In recent years there has been an extensive debate on the value of some of the deep parameters driving the economy, such as the natural rate of interest and the slope of the Phillips curve, estimates of which are quite uncertain. This column argues that when facing uncertainty on the structural relationship among macroeconomic variables, central banks should adopt a pragmatic and data-dependent approach to adjusting their monetary policy stance.

The extent to which tax policies influence the amount of labour that private households supply has been at the centre of many public policy debates. Within married couples, joint versus separate taxation may be one factor that contributes to differences in household labour supply. This column uses a model that closely reproduces the changes in married women’s labour supply in the US and Europe between the early 1980s and 2016 to show that taxes are indeed a major factor shaping the labour supply of married women.

People with shorter life expectancies place more value on increases in survival than people who anticipate longer life spans. That may seem obvious, but economists have been making the opposite prediction for decades. This column demonstrates the mistake in the earlier theory and points out important policy implications, including that payers and governments are undervaluing investments in treating highly severe illnesses.

Estimates of trend total factor productivity growth in the US have been significantly reduced, contributing to fears that the slowdown is permanent. This column provides an historical perspective on the relationship between estimated trends in total factor productivity growth and subsequent outcomes. It argues that In the past, trend growth estimates have not been a good guide for future medium-term outcomes, and ‘techno-optimists’ should not be put off by time-series econometrics.